TUPE and fragmentation


Share

In McTear Contracts Ltd v Bennett and others; Mitie Property Services UK Ltd v Bennett and others the Employment Appeal Tribunal (EAT) has followed the decision in ISS Facility Services NV v Govaerts where the European Court of Justice (ECJ) held that where a transfer of an undertaking involved more than one transferee the rights and obligations under an employment contract are transferred to each of the transferees, in proportion to the tasks performed under the contract. 

Amey Services Ltd (AS Ltd) replaced kitchens within the social housing stock of North Lanarkshire Council between 2012 and 2017. A group of AS Ltd's employees worked exclusively on this contract, latterly in two teams. Each of the teams had the full range of trades necessary to fit kitchens. Although the teams provided cover for each other for sickness absences and holidays they generally worked independently. They were not allocated to a particular part of the Council's geographical area. The Council retendered the work splitting it along geographical lines (north and south) into two separate contracts and the work was awarded to two new contractors, MC Ltd and MPS Ltd.

AS Ltd undertook an analysis of the geographical areas in which each team had worked during the preceding 12 months and compared the results with the geographical areas allocated to the new contracts. A spreadsheet was produced identifying the locations at which work had been undertaken during the final period of AS Ltd's contract with the Council and AS Ltd allocated one team to MC Ltd and the other to MPS Ltd.The companies did not take on all of AS Ltd's employees and some went on to bring tribunal claims.

The tribunal concluded that there had been a service provision change and allocated employees to each of MC Ltd and MPS Ltd according to which team they were in with AS Ltd. Both of the companies appealed to the EAT arguing that the tribunal had erred in the allocation of employees. 

The EAT held that the case now had to be read in light of the Govaerts decision (this had been handed down between the tribunal's judgment and the hearing of the appeal). The EAT noted that, as a result, there was no reason why an employee may not, following a transfer, hold two or more contacts of employment with different employers at the same time. This was subject to the proviso that the work attributable to each contract is clearly separate from the work on the other(s) and is identifiable as such. The EAT remitted the case to the same tribunal for it to consider whether the claimants had transferred to MC Ltd or MPS Ltd.  

Take note: The EAT's decision confirms that it's possible for an employee who works across more than one part of a business to have their contract divided up between more than one transferee taking the proportions of the time they spend, and the value they add to the different parts of the business, into account. This will lead to a change in approach in fragmentation cases as a tribunal will have to consider whether an employee's contract will have to be divided up between more than one transferee.  For a more in-depth discussion of this case and its implications please refer to our recent bulletin: TUPE and fragmentation: a change of approach? 
Insight

HR Law - April 2021

Explore
Insight

Increase to statutory payments and extension of the NMW record keeping provisions 

Explore
Insight

Worker not entitled to carry over right to payment for annual leave previously taken

Explore
Insight

Calculation of a Week's Pay Regulations don't have retrospective effect

Explore
Insight

Supermarket retail staff can compare their terms to those of distribution workers in Asda equal pay case

Explore
Insight

An enormous sense of (financial) wellbeing - still a blur on the horizon?

Explore